Introduction and Situational Analysis
Onchocerciasis, known as river blindness, is caused by parasitic worms that live in the small black flies that breed in and about fast-moving rivers in developing countries in the Middle East, Africa, and Latin America. The disease, if untreated causes extreme discomfort and eventually, blindness. In 1978, the World Health Organization estimated that over 300,000 people were blind because of the disease and another 18 million were infected. At the time, there was no safe cure (Trevino, & Nelson, 2011).
In 1978, Merck, while testing invermectin (a parasite killing drug for animals), found that invermectin killed a parasite similar to the one that caused river blindness. The problem for Merck was that river blindness generally only affects people in very poor areas and there was very little chance to recoup their financial investment by selling the drug.
The ethical dilemma represented by this situation is focused on what course of action Merck should take. Does Merck invest precious resources (both time and money) into testing and developing a drug that will not increase their profits? Or should Merck invest the resources knowing that their work, while not profitable, has the potential to save millions of lives and end the suffering of tens of millions more?
On the Merck website, I found this listed first among their Values: Our business is preserving and improving human life. We also work to improve animal health. All of our actions must be measured by our success in achieving these goals. We value, above all, our ability to serve everyone who can benefit from the appropriate use of our products and services, thereby providing lasting consumer satisfaction (Our values, 2008). Corporate success (profit) vs. Corporate philosophy, while it is easy to talk about ethics and charity, the river blindness scenario was a huge test of Merck’s corporate character.
Stakeholders
After reading the case in our textbook and going out to read about this river blindness issue, I have changed my opinion on who the stakeholders are in this situation (compared to what I wrote in the weekly discussions). The stakeholders, in my opinion are:
- Merck shareholders and investors
- Merck employees
- Merck management
- People affected by (or potentially threatened by) river blindness This list is not a ranking of stakeholder importance as that is truly a subjective measure based on your view of the situation.
Merck shareholders and investors may or may not share the company’s “people first” vision. For this group, the impact must be looked at in light of how the development of a drug (that will most likely be given away for free) affects the return on their investment. We have to remember that not all investors are rich billionaires like Warren Buffet, some are average, working class folks who rely on their investment income to help them survive.
People invest in Merck because they expect a certain reasonable return on their investments and Merck has a responsibility to act in the best interest of their shareholders. If Merck decides to spend time and money on a philanthropic endeavor, how does the investment of time and manpower affect their other drug trials?
Merck employees are stakeholders because their livelihood depends on Merck making enough profits to continue paying them. A few years ago I would not have viewed employees in this light but the more I learn about the company/employee dynamic, I begin to understand that employees, whether or not they have some financial interest in the company (other than salary), have a vested interest in the success of the company. Like the shareholders, employees make a choice to invest in a company. In their case, it is an investment of time and their investment is tied to professional growth. Merck must make decisions that do not recklessly jeopardize the future of their employees.
Merck management’s stake in this is similar to that of the employees. The difference is that not only are they invested professionally; the management team has been given stewardship over the Merck brand and corporate identity. They must make the decisions that set the company’s path so that the brand is financially successful while being true to the corporate vision that was discussed earlier.
Last, but certainly not least, we get to the people who are affected by the river blindness disease. These people have voice in what Merck chooses to do but at the same time they are the reason that Merck is in business in the first place. As of 2006, estimates are that 37 million are infected with, and up to 100 million people are at risk of contracting, river blindness (Hearney, 2007). For a company like Merck that claims to be more concerned with people than profits, these people are definitely stakeholders in Merck’s decision to move forward with invermectin trials.
Analysis Based on Ethical Theories
Cultural relativism means that any decision is right (or wrong) depending on whose side you are taking at the moment. Because the United States doesn’t have a single, ethical baseline that guides our actions, each individual view holds equal weight and there is no absolute right or wrong. For this case, Merck could decide to cut the research on invermectin, order it’s scientists to not discuss the issue, and sit back while millions of people suffer through a horrible existence without a second thought.
People who oppose Merck’s decision would have no standing to say anything about the decision because it is the right decision for the business culture in which Merck operates. For the suffering masses, this decision could be viewed as something akin to the Nazi decision to kill millions of Jews but based on the cultural relativistic school of thought, their view would not be any more important or morally superior than Merck’s.
Part of the problem with this theory is that we are forced to accept barbaric actions as acceptable (burning people at the stake, cannibalism, beheading, “honor” killings, stoning, etc.) because it is accepted by another culture. I find it ironic that there would have been a huge public outcry (from the very people who support cultural relativism) if Merck had decided to stop testing and not develop the drug. In general, these “liberal and enlightened” folks are only tolerant of the cultures and people with whom they agree.
The teleological approach to this dilemma would require an examination of the issue and a breakdown of all the possible consequences of the various options presented. Lost revenues cause stock price to drop. People on fixed incomes lose dividend money and are forced to live in poverty.Positive public reaction to charitable act. More investments, higher stock prices.NoneFocus resources on other drug lines could result in higher profits, increasing stock prices.
Investors make more money and their standard of living increases. Merck EmployeesCompany loses money, loss of profits forces layoffs.Chance to contribute to a worthwhile cause. Work on invermectin could lead to breakthroughs in other drugs.Loss of respect for Merck leadership. Perception that values are overshadowed by financial considerations.Focus on more lucrative products, increasing profits and salaries/benefits. Merck ManagementLoss of time/resources forces delays in other projects/products.
Delays cause stock to drop. Loss of job.Public confidence spikes, stock price goes up. Influx of cash allows us to expand other projects.Public confidence crashes. Backlash forces investors to pull out. Jobs lost due to loss of capital. Focus on more lucrative products, increasing profits and salaries/benefits. People affected by river blindnessPossible fatal side effects (similar to other drugs).
Using the chart above, we would look at how the benefits and harms balance out to maximize the benefit for society. Obviously, using this method, we can see that the benefits of continuing the research and development of this drug has the potential to save millions of lives while the potential harms are restricted to the loss of some profits and the possible delay of some other drugs. This approach isn’t about right or wrong; as long as the maximum societal benefit is reached, the actions taken to get to that point are not part of the equation.
The deontological approach removes the harm/benefit comparison and focuses on the duty and obligation of Merck to do the right thing once they discovered that there was a possible cure for this disease. Merck’s corporate values statements show that this is the approach they choose to take in their daily operations. Profits are not the prime motivator, helping people is what they are all about. In this case, Merck decided to continue the research and help the people regardless of the consequences involved.
According to the Merck website, since 1987, Merck has donated more than 2.5 billion tablets of MECTIZAN® (ivermectin) in more than 30 countries worldwide. According to some deontological approaches, certain moral principles are binding, regardless of the consequences. Merck’s stance now matches up with what George W. Merck said in 1950, “We try never to forget that medicine is for people. It is not for profits. The profits follow, and if we have remembered that, they have never failed to appear. The better we have remembered that, the larger they have been.”
As someone who follows the deontological approach myself, I can appreciate how difficult it can be to remain committed to this principle. Merck is a business and as such it doesn’t exist to give money away. I have argued that the people who invest in Merck have a huge stake in what the company does but part of the investment process is doing due diligence and research to make sure you are comfortable with how a company operates.
Merck devotes an entire section of their website to Corporate Responsibility and they have detailed information on the initiatives they support. Part of the culture at Merck is one of giving back to the community and helping others so for Merck, the decision to develop invermectin was an easy one. Having a strong moral and ethical foundation makes it easy to make the right decision when faced with “easy” decisions that fall into the ethical gray area.
The virtue ethics approach would looks at the motivations and intentions of the decision maker as opposed to the results of his or her actions. In this case, if Merck had decided not to pursue the research and the CEO stood up and explained that the reason was because they had an obligation to their shareholders to focus on developing products that would be profitable, he would have been right due to the professional expectations of his office.
CEO’s are supposed to make companies profitable, period. As long as Merck was operating legally, the moral questions about the results of the decision are not relevant to the virtue ethics approach. If the board announced that Merck, based on their stated corporate values, was going to continue to expend time and resources on a cure for river blindness even though it wasn’t a profitable project, their motivation for action would be guided by Merck’s established values and the sense of corporate responsibility that is important to them. Neither position would be wrong regardless of the outcomes because both courses of action were guided by the best intentions of their leadership.
Conclusion and Recommendations
In this case, I feel that Merck made the proper decision based on their core corporate values and the deontological approach to ethical decision-making. While I might have gone a different direction if I was making decisions for Merck, it is obvious from all my research that this program is helping millions of people each year. I was wrong about the river blindness issue in my original discussion post, this isn’t just about philanthropy or looking good for the public, this program (and the many other like it) run by Merck is all about being true to their core values.
Even when they could not get financial backing for this project, they did what they felt was right regardless of the cost. The success of the river blindness campaign led Merck to begin providing ivermectin to treat lymphatic filariasis (Elephantitis) in Africa (Voelker, 1998). I am not so naïve as to think that Merck isn’t reaping some benefits from these programs but whatever small reward they are getting is well deserved when measured against the lives they have touched.
There are no recommendations I could make for Merck in the way they handle these situations. Merck’s actions are consistent with their stated policies and they have managed to thrive while ensuring that the original intent of their founders (people before profits) is not lost in the rush to be commercially successful.
